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Public sector
Central government

“In 2008, service delivery of our learner support programme became unacceptable and this led to the LSC terminating its arrangement with the previous contractor. Capita was brought in at very short notice and responded quickly and professionally in retrieving the situation through short term fixes. Capita had been the reserve in the original procurement so we appointed them for the remainder of the 6-year contract. Already they have introduced new systems that have worked very effectively in their first year of operation and we continue to work constructively and collaboratively together on further enhancements to the programme.”

Trevor Fellowes, Director of Learner Support, Learning & Skills Council (LSC)

Market position

Central government currently accounts for 10% of Group revenues.

Capita is the leading service provider in central government, with contracts spanning recruitment and employment checking, accreditation and records management as well as administration of public sector pensions and public grant programmes.

Size of opportunity

Against a background of the Government facing increased pressure to reduce the public finance deficit and manage down debt, and with an estimated annual spend of £6bn and over 250,000 staff in administrative operations, central government presents a significant opportunity for outsourcing. There is scope to help increase the efficiency of the administrative operations supporting frontline government services, particularly in areas such as welfare, revenue collection, defence, justice and transport.

Beyond outsourcing IT and facilities management, few central government departments have outsourced wider services such as customer handling, HR or financial administration services. We expect this to change as fiscal pressure and public demand prompt them to explore outsourcing as a sustainable and effective solution to delivering more for less.

Outsourcing key administration and customer services will enable Government to adopt new ways of working and access expertise and resources for transforming public services to meet citizens’ individual needs.

Drivers for outsourcing

  • Regardless of the outcome of the 2010 UK General Election, there will be increased pressure on central government departments to deliver frontline services at similar or reduced levels of funding over the next spending review period which takes effect from April 2011
  • Further use of benchmarking of routine front and back office services will add pressure on departments to drive out efficiencies and achieve value for money
  • Evidence from other sectors, including local authorities, that BPO and new models of public service delivery can achieve more for less
  • Access to skills and technology investment that can guarantee savings up front
  • Continuing requirement to make public infrastructure fit for current and future needs – e.g. transport and Building Schools for the Future.

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